New era of pervasive agricultural
subsidies? (The Hindu)
Mains Paper 3: Economy
Prelims level: Agricultural subsidies
Mains level: Pervasive agricultural subsidies and its impact on economy
- Managing India’s groundwater has become a big challenge for
- Over the years, the challenge has become very complex, with political
economy taking dominance over hard science.
- Since groundwater overdraft is also linked to subsidised power supply to
agriculture, researchers had explored how the mode of electricity pricing
supplied to agriculture could be changed to control groundwater abstraction
and to achieve the goals of efficiency, equity and sustainability.
- The most frequently suggested instrument for controlling groundwater
draft was the metering and pro-rata pricing of electricity.
- In India, there is a large body of research which raises scepticism
about the viability of metering irrigation pumpsets, claiming that it is
political suicide for any government to even think about installing meters
in farmers’ field, and that whenever it did do so, it led to fall of the
- However, there was no reality check on this claim.
- A study by the World Bank in 2001 in Punjab and Haryana showed that
farmers are willing to pay for electricity if quality power supply is
- More curiously, even after the government in West Bengal successfully
introduced pro-rata pricing of electricity in the agriculture sector in
2006, this false narrative continues.
Electricity pricing conundrum
- The idea was to make sure that farmers get free power, but the power
utility reduces its subsidy burden gradually by incentivising the farmers to
use less electricity, thereby saving both groundwater and electricity.
- It involves metering of agricultural power connections, but no metered
- This model, adapted by the power utility of Punjab, involves offering
cash incentives to well-irrigating farmers who use less than a designated
quota of electricity each season.
- The individual’s quota is decided on the basis of the connected load and
- For one HP of connected load, a farmer is entitled to 200 units a month
during the kharif season and 50 units per month during the winter.
- The farmer gets a cash incentive of ₹4 for every unit of electricity
- This pilot project implemented in 135 farms across Punjab, has shown
reduced electricity consumption by around 60 per cent of the farmers, while
nearly a third of the farmers had increased electricity consumption even
after accepting the scheme.
- The claim is that the farmer had ‘saved’ electricity and the
corresponding groundwater equivalent.
- To know the validity of this claim, we should know the rationale behind
fixing the quota based on the connected load.
- In a given year, season and locality, the power demand will be a
function of the cropped area and cropping pattern.
- Many resource-rich farmers have chosen over-sized pumps.
- In such cases, their energy quota will be much higher than what is
required to irrigate the plot even at the current excessive levels of
- The reason for maintaining the high-level of irrigation dosage could be
that it can be rewarding from an economic perspective as it might result in
yield improvement, whose value is more than the economic incentive they get
by saving water.
- Hence, these resource-rich farmers will be able to keep their power
consumption much below the allocation or ‘quota’ while continuing with
inefficient irrigation, and yet be able to claim the cash incentive; whereas
a resource-poor farmer, who has a low-capacity pump might end up using the
full quota of energy or even more.
- Ideally, the ‘energy quota’ for deciding on the incentive should have
been fixed on the basis of the actual land holding cultivated by the farmer
during a particular season which determines the water and energy
requirements for irrigation.
- The point is that the current subsidy structure may not create any
special incentive to save either electricity or groundwater in Punjab.
Will this help conserve groundwater in Punjab?
- It is quite well-known that the irrigated paddy fields as well as
rainfall contribute to the recharging of shallow groundwater during the
monsoon season in alluvial Punjab.
- Therefore, groundwater storage change is the net effect of the gross
draft and the ‘total recharge’, the latter being the sum of rainfall
infiltration and irrigation return flows.
- The gross abstraction equals the water consumed by crop added with the
soil moisture depletion after crop harvest, soil moisture storage and the
deep percolation or irrigation return flows.
- Therefore, reducing the gross draft might only result in a reduction of
return flows and change in moisture storage, so long as the farmers don’t
choose a crop or variety with lower evapo-transpirative requirement, which
is unlikely as it might lead to yield reduction.
- But the people who designed the project seem to be completely unaware of
- Only a fraction of the total water applied (around 1,200 mm) to the
field for kharif paddy actually gets consumed by the crop.
- Since the evapo-transpirative demand for kharif paddy in Punjab is
around 450-480 mm, the rest of the water is available as return flows to
- Hence, even if the farmers reduce the amount of water applied to
irrigated paddy fields to reduce electricity consumption, there won’t be any
- One wonders how on earth the farmers are offered a heavy cash incentive
of ₹4 for saving a unit of electricity, while the actual cost of supplying
it (₹5.12/unit) is only a little more than that.
- Instead of offering cash incentive for the fictitious power saving, the
agency should start working on establishing (volumetric) water use rights
amongst the groundwater users, fix equivalent energy quota, and then start
monitoring groundwater and electricity use.
- No doubt, these are extremely difficult measures and would require great
degree of coordination among various departments water resources,
electricity and agriculture.
- But once they are initiated, there won’t be any need for promoting
efficient irrigation technologies and water-efficient crops.
- Farmers will take up these measures on their own, without any subsidy
Q.1) With reference to a new study on school education released by NITI
Aayog, consider the following statements:
1. India has almost 3-4 times the number of schools (15 lakh) than China
(nearly 5 lakh) despite a similar population.
2. Annual Status of Education Reports (ASER) found that nearly half of class 5
children cannot read a class 2 text.
Which of the statements given above is/are correct?
A. 1 only
B. 2 only
C. All the above
Q.1) What do you mean by the new era of pervasive agricultural subsidies? Will
this help conserve groundwater in Punjab?